There’s nothing like a hobbled business model to keep the higher-education consulting business hopping.
After years as a managing director at Huron Consulting—preceded by a long career as an administrator at several prominent universities—John Curry recently stepped down from his Huron post. Unsurprising, perhaps, considering that he’s 73.
But Mr. Curry didn’t retire. He moved to another consulting firm, Deloitte, which recruited him to help guide strategy for the organization’s expanding practice in higher education. In the past two years, Deloitte has doubled, to 200, its consultants working in higher education.
Peter Stokes, another expert in higher-education management who is well known for his prior work at Eduventures and as a member of the Spellings Commission, just rejoined the consulting ranks. After working for the past several years on strategy and business development for Northeastern University, Mr. Stokes joined Huron in October as one of 35 managing directors in the higher-education practice, which now has 335 consultants. He’ll focus on cost containment, revenue strategies, and, as he puts it, helping colleges respond to internal pressures from trustees and outside pressures from lawmakers and the public “to become more this and more that.”
Meanwhile, another big consulting company, EY (once known as Ernst & Young) upped its profile in the higher-education market in September by acquiring the Parthenon Group, a 300-person firm that had long been known for its work in international and for-profit higher education. In the past two years EY has also become more active with clients in the nonprofit- and public-college sectors, advising on such matters as whether and how the institutions should go online, how to attract international students, and how to better engage with potential employers of their students.
“Unfortunately, there are a lot of serious issues that the sector is facing,” says Robert S. Lytle, a managing director in Parthenon’s education practice.
It’s not just the big firms that are riding the wave of turmoil roiling higher education. Just four years after he left the College of Notre Dame as vice president for finance and administration, Rick Staisloff now runs a 15-person consulting operation, rpkGroup, that helps colleges understand the financial underpinnings of their academic portfolios. The questions he helps colleges answer, says Mr. Staisloff, are often: What do I offer, to whom, and how? And lately, he says, he’s also found college leaders talking more about collaborations and even mergers, “which you just never would have heard in the past.”
Complaints From Professors
The companies’ attention to higher education is not always welcomed by those who say consultants don’t understand colleges’ culture or needs. Witness the concerns of professors and others at the University of North Texas at Dallas to a Bain Consulting plan; the outrage of faculty members at the University of Michigan at Ann Arbor and the University of Texas at Austin over “shared services” approaches promoted by Accenture; and the objections raised by faculty unions at the Minnesota State Colleges and Universities system over a reorganization plan from McKinsey and Co.
But the attention is understandable. As Mr. Stokes notes, “The market has grown, the dollars have grown, the stakes have grown.”
Financial motives, of course, are driving consultants’ interest. But Jeffrey Bradfield, who heads the higher-education practice at Deloitte, says that, for firms like his, colleges aren’t as lucrative as commercial clients are. And Mr. Stokes says, “It’s not capital coming into the market to take out profit the way it was with for-profit higher education” or the way some venture capitalists investing in education technology are now behaving.
For him, he says, it’s the challenge of finding ways to tailor new kinds of educational offerings—online, competency-based, internationalized—to different markets. He’s particularly fascinated by how faculty roles might be unbundled. Courses now have authors, designers, assessors, and instructors, he notes. “That kind of redesign of the labor model can create efficiencies” that aren’t necessarily negative.
“We’re not sitting here watching a train wreck,” Mr. Stokes says of higher education. What we’re seeing, he says, is “a crucial element of our economy go through a transformation.”
Treating the Cost Disease
Mr. Curry says he understands why faculty members may be wary when consultants show up. “In significant measure, they’re right,” he says, pointing to the resistance at Michigan. “A lot of consulting firms have developed pretty good recipes” that don’t always fit the circumstances. Consulting works best, he says, when it “engages the people most affected.”
But the demands on colleges to do more with less have grown, such that bringing in outside help makes more sense, he argues.
Mr. Staisloff says that some changes don’t have to be all that radical. Colleges can accomplish some savings just by adjusting the size and scheduling of classes, which in some cases could get more students in front of full-time professors. Colleges, he says, still have “lots of good efficiency and productivity plays.”
As Mr. Curry puts it, efforts to wring out costs from the administrative side are “far from exhausted.” But that may not be enough. “At some point,” he says, “productivity gains have to come from the academic sector itself.”
For many years, Mr. Curry observes, higher education has let the explanation of “cost disease” be an excuse for rising costs. (That’s the theory, described by the economist William J. Baumol, that says it is difficult to cut the costs of certain kinds of labor-intensive activities carried out by highly skilled people like musicians, dentists, and professors.)
“I’ve lived with the Baumol’s disease for a long time,” says Mr. Curry. “In my heart of hearts, I see people running out of rope.” It’s one reason he decided to take on another big job rather than take up golf: “I’d like to tell myself, Yeah I made a little nick in Baumol’s disease.”
